Seeking Alpha
Growth, tech, long/short equity, research analyst
Profile| Send Message|
( followers)  

Summary

  • LinkedIn tried to improve on-site features and social media experience by acquiring number of startups in first wave of acquisitions.
  • Second wave of acquisitions aimed at growing services provided by LinkedIn.
  • New job search app is the first attempt to leverage LinkedIn’s strengths and gain revenues from standalone service.

Since its launch in 2003, LinkedIn (NYSE:LNKD) was different from the other players in the social media market. Out of the few leading social networking sites, Facebook (NASDAQ:FB), Twitter (NYSE:TWTR), and Google Plus (NASDAQ:GOOG) provide their users similar online social interaction and networking services that involve almost any aspect of our lives. Users can interact or network via Facebook, Twitter, and Google Plus according to their similar interests in sports teams, life events, favorite TV shows etc. Unlike the three sites mentioned above LinkedIn is different and evolves only around the professional aspects of life: career advice, interaction with colleagues, business content, job search, and more. When Twitter, Facebook, and Google Plus gained more and more market share, LinkedIn executives had to decide whether they should adjust their site to become more similar to these three or should they emphasize the difference and invest in the professional aspects of social media. LinkedIn management chose to invest further in its current platform and expand the company's portfolio to other professional aspects that were not previously addressed.

In 2010, LinkedIn started the first wave of acquisitions that were targeted to allow LinkedIn to offer new features on the company website. LinkedIn's first acquisition was mSpoke, a recommendation technology startup, for an undisclosed amount that aimed at implementing mSpoke recommendations technology into LinkedIn. In that wave of small acquisitions, LinkedIn acquired a few other startups to implement in the social platform, such as ChoiceVendor, CardMunch, Connected, and IndexTank, to name a few.

In 2012, LinkedIn started the second wave of acquisitions, which were targeted to allow LinkedIn to grow its professional content and talent services in order to leverage its strength as a professional network. The first company purchased in this wave was SlideShare, for $119M. SlideShare was a professional content-sharing platform where individuals and companies shared presentations and informational materials online. Buying SlideShare made much sense to LinkedIn because the acquired startup was able to implement a complementary service that had 30 million unique visitors per month worldwide. SlideShare's acquisition allowed LinkedIn users to share presentations and discover new people through content shared on SlideShare.

One year later, in 2013, LinkedIn acquired the news-reading app Pulse for $90M, which aimed to be its publishing and reading platform. LinkedIn's acquisition of Pulse case made perfect sense, as in SlideShare case. Pulse had 30 million users globally and was a leading publishing and reading platform for professional content. Pulse's acquisition allowed LinkedIn to use Pulse's publishing platform to publish news and updates, as well as attracting new users to LinkedIn who are interested in Pulse's content.

Earlier this year, LinkedIn acquired the job search startup Bright for $120M. Bright has a unique technology for matching job seekers and employers through data analysis. Bright's acquisition allowed LinkedIn to improve its talent solutions and job search module. Although it was never publicly stated, one can infer the link between the Bright acquisition and LinkedIn's new job search app.

Given all the above acquisitions, LinkedIn can offer its users a wider portfolio of services addressed to the working individual. LinkedIn offers professional content, either by Pulse or SlideShare, quality job search services through Bright, and a decent social media experience through all of its other recent additions. At this point, LinkedIn has the arsenal needed to offer a quality professional networking site and it can try to expand its user base.

In the middle of June, LinkedIn launched its new standalone iOS app designed for job search. The job search app is LinkedIn's first strategic move to expand its user base through a standalone service. In the last few years, LinkedIn has tried to increase added value for its users through adding features and content that address the needs of the professional world. The new job search app has an excellent chance of increasing LinkedIn's user base as it addresses the most important piece for every professional - the career path.

LinkedIn's job app allows job seekers to search for new jobs from their mobile devices, privately and without the need to share that with their entire network. The new app makes job seeking more accessible and potentially more popular with job seekers. Increased popularity of the new app will increase service revenues from employers' and sponsors' talent solutions. Moreover, increased popularity of the new app will increase the number of LinkedIn users and drive advertisers to increase their LinkedIn ad budgets.

Conclusions

For a few years, LinkedIn invested in developing its social platform and its on-site features through a number of relatively small acquisitions. In 2012, LinkedIn took its strategic investments a step forward and began to invest in developing its professional services. LinkedIn acquired SlideShare and Pulse to bring quality content to its users, and Bright to offer better job search services. LinkedIn's job search launch is its first attempt to leverage its strength to drive additional revenues from a standalone service. In light of its professional focus and experience in job search services, LinkedIn has a pretty good chance to succeed and increase its revenue.

Source: LinkedIn Tries To Leverage Its Strengths Into Revenues By Launching Job Search App

Additional disclosure: Information provided in this article is for informational purposes only and should not be regarded as investment advice or a recommendation regarding any particular security or course of action. This information is the writer's personal opinion about the companies mentioned in the article. Investors should conduct their own due diligence and consult with a registered financial adviser before making any investment decision. Lior Ronen and Finro Financial Consulting and Analysis are not registered financial advisers and shall not have any liability for any damages of any kind whatsoever relating to this material. By accepting this material, you acknowledge, understand and accept the foregoing.